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Refinance Mortgage: What are the Disadvantages of Refinancing Your Mortgage
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By Louie Latour

Refinancing your mortgage loan can save money and make your budget more manageable. There are disadvantages and risks associated with refinancing your mortgage; the main disadvantage is that you are back to square one with your loan amortization. This means your payment will primarily go to interest and you will build very little equity in your home. There is a way around this; you can keep your original pay off date and reduce your finance charges.

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Choose a Short Term Length

Mortgages come with a variety of term lengths ranging from ten to thirty, even forty and fifty years. By choosing a short term length you can match the payoff date of your original mortgage loan somewhat closely. By choosing a mortgage with a shorter term length you will qualify for a lower interest rate and will build equity in your home at a significantly faster rate. This will reduce the amount of finance charges you pay to the lender.

Pay Additional Principal Each Month

If choosing a shorter term length doesn

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This entry was posted on Saturday, October 7th, 2006 at 4:42 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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